Tag Archives: Sport

The Real Magic

I bought a ticket yesterday to see the Michigan Wolverine basketball team play North Carolina. It’s a chance to see a team that I root for in person, and since I don’t live close to Ann Arbor, those chances don’t come very often without significant travel. It wasn’t cheap – over $100 to sit in a so-so seat – but as I’ve written many times, cost and value aren’t the same

Yes, the game will be on TV and I could just stay home and watch it, as I do many of their other games. In fact, as a person who made a living in the sports TV business, I often ask myself why people both going to games now at all. After all, it’s expensive, it’s time-consuming, and the viewing experience is often much better sitting at home. I know from my time at a league that clubs are well-aware of this and they try to make the game-day experience worth the time and money, and many do. But the real reason I and other fans go to the game is something that any of us can bring to our business: authenticity.

I’ve been to hundreds of sporting events. I’ve been to hundreds of concerts. They’re often forgettable – your team getting shellacked or a bad night for a band. But every time the experience is real, and part of that is sharing it with thousands of others. Some bands forget this – they use a lot of recorded sound in their show, often including vocals. Some teams come out tired and slow – maybe it’s their third game in four days. No magic there because in neither case are we seeing the real deal – an organization performing at its full potential. The fans know it too – there’s no electricity in the building (and in sports, there’s often a lot of negative energy expressed as booing). People want experiences, and especially experiences they can share.

This is something any business should remember. Customers want something real. They can tell when we’re “fake nice” or when we’re being unresponsive. They want consistency too. The fan who pays for the “off night” goes away unhappy and is unlikely to return. As our lives get more virtual, I think we all crave genuine things, experiences and businesses among the things for which we hunger. You?

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Filed under Thinking Aloud, sports business

Not So Great Expectations

The gasoline that keeps a good portion of the sports machine running is sponsorship. I’m using the gasoline analogy today because there has been a high profile sponsorship dispute going on in the world of auto racing and I think it’s instructive to any of us who sell or buy pretty much anything.

You’ve probably heard of Danica Patrick, NASCAR‘s only female driver in its top-level series, The Monster Energy Cup. She drives for Stewart-Haas Racing (SHR), who sold the rights to sponsor her car in 2016 for several years. Somewhere along the line things went south and Nature’s Bakery terminated what was a three-year deal after the first year, claiming that SHR “did nothing other than collect Nature Bakery’s money”. An additional issue was that Danica personally endorsed a competing product (albeit one with no visibility on the car or around the races). SHR sued to recover the agreed-upon payments. As it turns out, Nature’s Bakery will sponsor four cars during this season, split between SHR’s drivers, as part of a settlement.

I spent a lot of years selling sports sponsorships and I know first-hand how hard it is sometimes not to over promise in your zealous pursuit of the sale. In this case,  Nature’s Bakery was told to expect a 4-to-1 return on investment. The reality was there was no significant increase in sales. That could have been due to any number of reasons, including some that had to do with logistics and not with awareness, but it points to a core issue.

When you’re selling anything, setting expectations and agreeing on how performance is going to be measured is key. In this case, many of the measures of awareness did rise significantly, but if the client’s goal was sales then the buyer and seller seem misaligned. Keeping expectations of both parties on the same page and in alignment must be the goal of all parties, and the documents shouldn’t be signed until that goal is reached.

There also seems to be some inexperience in sports sponsorship at work here. A team that has Coke as a sponsor might very well have athletes who endorse Pepsi. An arena with Mastercard as a building sponsor might see an athlete who plays in that building in an American Express commercial. Danica is one of NASCAR’s most visible drivers and her personal endorsements should have been identified to the buyers (even though anyone could find them easily on her personal website). Always remember that a good seller sits on the same side of the desk (figuratively speaking) as their buyer since you’re both trying to accomplish the same thing.

Aligned expectations, appropriate measures of reaching goals, and transparency are how sports sponsorships (and others too!) get done and stay on track. You with me?

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Filed under Consulting, Helpful Hints, sports business

Is The End Near For Sports?

I know you might be thinking that my headline is just some outrageous form of click bait and that I can’t seriously think that big time professional sports are heading down the same path as traditional big media. Let me throw a few recent articles at you and maybe you’ll come to a different conclusion (which I do hope you’ll post in the comments).

The sports business is based on a few large revenue streams. One is income from the games themselves: ticket sales, concessions, merchandise, etc. What makes many of those things possible is a nice facility – an arena or stadium. We’ve seen franchises move (and piss off their fans) over the stadium issue, sometimes even before the bonds on the last stadium built for the team are paid off. I urge you to watch the John Oliver piece on the relationship between teams and towns but here is why I suddenly think there is an issue. As reported by Mondaq:

bill has been introduced that would eliminate the availability of federal tax-exempt bonds for stadium financing… The bill would amend the Internal Revenue Code to treat bonds used to finance a “professional sports stadium” as automatically meeting the “private security or payment” test, thus rendering any such bonds taxable irrespective of the source of payment.

In other words, it will make public spending on a private facility way more difficult. That will lead to fewer new facilities and a much harder path to growing that revenue stream. Strike 1.

Then there is the largest revenue stream for most big leagues: TV. Kagen recently reported that the U.S.pay-TV industry will lose 10.8 million subscribers through 2021, according to their latest forecast. You might already know that ESPN has been losing subscribers – May 2017 estimates were 3.3% lower than the year before. For every million subs lost, ESPN takes in roughly $7.75 million less PER MONTH – or $93 million a year, and they have already lost multiple millions of subscribers. Yes, some are being replaced via the sale of OTT services, but that requires spending to sign customers, something ESPN hasn’t had to do before. The same subscriber loss issue is true of every other sports network albeit to a lesser degree since their monthly fees are less than ESPN’s. Smaller subscriber fees mean a diminished ability to pay those large rights fees. Sure, other channels (some would say suckers) will step up – Facebook, Twitter, YouTube, and others. But my guess is that the outrageous increases many entities have secured over the last few rights cycles are gone for good. Strike 2.

Finally, costs are not going to go down, at least not without major disruptions such as the two recent NHL lockouts. Players aren’t going to make less (the downside of the salary cap), team personnel probably won’t, at least not without a lot of turnover, and many of the other costs are either already low (minimum wages) or difficult to cut (food costs in the concessions, etc.).  In an effort to mitigate some of the lower revenue and growing costs, some of the entities involved in sports are beginning to do what the airlines have done and make what was once part of the deal (in-flight meals, free bag check) part of an a la carte menu to grow revenue. Specifically, look, for example, at what NBC has done with their Premier League package. They are doing away in part with their NBC Sports Live streaming coverage in favor of a new premium streaming service called “Premier League Pass” that will be in addition to the matches that are already broadcast on live TV. The stand-alone streaming service will cost $50 in addition to whatever you’re paying for your cable subscription. That will bring in more dough but it will also anger fans. Strike 3?

Don’t misunderstand me. I think interest in sports generally has never been higher, and I think any sports entity that doesn’t rely on a big TV contract and employs athletes as independent contractors (I’m looking at you, LPGA) will be in good shape. I just think there is a major disruption coming in the next few years as we’ve seen in the TV and music businesses. Watch out as the next cycle of TV deals begins and if this bill is passed. It’s going to be a bumpy ride, don’t you think?

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Sport At The Service of Humanity

I’ve spent many years in the sports business. Having grown up playing many sports and spending many hours watching them when I wasn’t playing, working in the business was a dream come true. As with many businesses, however, I and many of my colleagues sometimes lost sight of the basic appeal of the product. It’s taken the Pope to help remind me, and hopefully many others, of that. Let me explain.

Any product needs to solve a basic need. Identifying that need and building products that serve it are the basis for any business. What often happens, however, is that we get focused on our own needs and not those of the customer. We worry about profits and supply chains and staffing, and we’d be insane not to focus on those things too. We can’t, however, let them blind us to the fundamental purpose of solving the problem and servicing the need of the customer.

What does the Pope have to do with this? He is running a conference which began today called Sport At The Service of Humanity. It’s billed as the first global conference on faith and sport. No, it’s not about getting every player to thank some higher power every time they score. It’s intended to launch a “movement” to develop ­­life skills through sports ­­ and characteristics across six principles: compassion, respect, love, enlightenment, balance and joy. You should check out the conference’s website here.

There are a couple of things stated in the “declaration of principles” that resonated:

  • Sport has the power to teach positive values and enrich lives. Every one of us, who plays, organises and supports sport, has the opportunity to be transformed by it and to transform others.
  • Sport challenges us to stretch ourselves further than we thought possible.

I liked to hire people who were athletes, and not just because it was the sports business. It was precisely for the reasons stated above. Moreover, ex-athletes “got it.” They understood the sheer joy of sports, and that joy is a big part of the reason why fans watch them.

The Pope’s conference is about using sports to make us better human beings, but I think it can also serve to remind us of a fundamental business principle too. Your product needs to serve people and not just investors. Using your product to make people’s lives better – in this case, to teach life skills – is really the goal of business in my mind. Yours?

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Filed under sports business, What's Going On

93 Out Of 100

Every year, the folks at Nielsen put out a review of the previous year in sports media. This year’s report is out, and one statistic jumped out at me. In 2005, 14 of the top 100 programs watched live plus same day were in the sports category. Ten years later, 93 of the top 100 were sports. That’s right: despite all of the fragmentation that’s managed to kill most other forms of programming, nearly all of the most-viewed programs watched live or same day were sports. Is it any wonder that demand for sports inventory is so high when it’s the only form of programming that is both widely viewed and watched in real time?

One would think, therefore, that being a sports programming distributor would put one, as Red Barber used to say, in the catbird seat. Looking, however, at the recent negative reports on ESPN’s financial future in the above context might cause some head-scratching (disclosure – I’m a Disney stockholder as well as a former employee). The issues, I think, are several things. First, sports, like any other form of media, is fragmented. You might never miss a NASCAR race but I couldn’t pay you to watch golf. Sure, you’re a college football fan, but turn on the tube any Saturday afternoon and you can choose from dozens of games airing live. That’s fragmentation, and what’s happened is that the rights fees paid to acquire that programming by the distributors bear little resemblance to the audiences and, therefore, the advertising.

Not a problem, you say. There are affiliate fees. That’s true, and in the case of some sports rights deal, such as the NHL and NBC, the rights fee is paid on the come. After all, if NBC can raise what they get from distributors for NBCSN from 10 cents to a quarter (as an example – those aren’t real numbers), their affiliate fees more than double. Hopefully, the demand for NHL or any other brand of sports programming can make that happen.

All well and good until “skinny bundles” show up. Suddenly, people who never watch sports (yes, there are more of them than you think) have the option of reducing their cable bill by not paying $7 a month or more for sports shows they don’t watch. This is what is causing the negative predictions about ESPN. Smalle income from affiliates based on fewer subscribers to sports channels means smaller rights fees available for the leagues and other rightsholders. Smaller TV deals mean…higher ticket prices? More expensive concessions? Smaller player contracts? Labor strife?

93 out of 100 gets an A in most classes. It’s nice that sports is “bulletproof”. So was Superman, but he, and sports, have their weak spot. It will be interesting to see where this goes, don’t you think?

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All FIFA-ed Up

One of my favorite movies is Casablanca. It came to mind last week as the FIFA scandal unfolded. Soccer fan or not, you’re probably aware of the indictments issued (with more to come) against high-ranking administrators and marketing executives. If you’re not the details are here.

Casablanca? Yes:

That was, in essence, the response by Sepp Blatter, the head of FIFA, who claims to have had no clue such corruption was going on.  I’ll wait while you stop laughing, but this really is no laughing matter.  We are watching a major sports organization implode and there are billions of dollars involved.  It is a classic PR crisis, and one thing you can’t do in this situation is to go dark and allow others to dictate the conversation.  That is, however, exactly what the brain trust at FIFA is doing:

A quick look into Socialbakers Analytics tells us that that’s not what was going through the minds of FIFA’s PR team: out of the almost 8000 questions posed to them on Twitter in just under last month, they’ve responded to zero.

That’s from the Social Bakers blog.  Into that vacuum you have one of the indicted executives citing a piece in The Onion as supporting his innocence and several of FIFA’s corporate sponsors have expressed dismay while threatening to pull their financial support.  After all, brands sponsor sports in part so they can transfer the goodwill that fans feel for the sport to the brand’s equity.  When that goodwill vanishes, the brand is damaged as well.

What should they be doing?  I’m not a PR expert but I know silence is not an option.  The few messages they’ve put out there have been met with ridicule and the reelection of the man at the head of the organization, who claims he can clean it up, is widely seen as a negative.

“You can’t just ask everybody to behave ethically just like that in the world in which we live,” Blatter said in his opening remarks to the FIFA congress. “We cannot constantly supervise everybody that is in football,” he added. “That is impossible.”

Really?  Most big companies with which I’ve worked do exactly that, and the stench of corruption has been around the beautiful game for as long as I’ve worked in sports.  Staying silent in a crisis is bad.  Making statements that deny culpability (FIFA is trying to argue that all the problems are with other soccer organizations, not FIFA) is worse.  As with Louis in Casablanca, what’s been going on is very obvious and as the old line goes, I’m choosing to believe my lying eyes over FIFA.  You?

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Filed under Huh?, sports business

Know The Fan

The folks at Sporting News Media released their annual survey into US sports media consumption, the US Know the Fan Report.  I’m embedding an infographic below with the results but a few points bear mentioning.

First, it’s now safe to assume that a viewer of sports on TV is using a second screen.  The study found that nearly half of sports fans claim to use an Internet connected device at the same time as watching . This use helps fans to catch up on what’s happening with other games being played via live text commentary and live scores, as well as to access non-sports related content, communicate with friends about the sports event on TV, watch clips and highlights of other games being played and post comments to social networking platforms about the game/event they’re watching.

I find it interesting that while 96% of fans report watching sports on TV, only a third self-identify as having paid for it.  In my mind, paying the $6+ a month for ESPN qualifies as paying.  3% use a pay-per-view service — down from 9% from 2012.  Facebook, YouTube and Twitter remain the most popular networks overall for fans to follow sports but fans are using them less as compared to last year to make use of newer social networking platforms such as Google+, Instagram, Pinterest and Vine.

Live streaming remains the most popular content accessed (38%), followed by videos of game/event highlights (31%) and videos of sports news (27%). More than half of fans that watch videos of game/event highlights online (51%) and videos of player/manager/coach interviews (56%), do so via mobile device.

My takeaway is that this sort of disruption is occurring everywhere and sports viewing is an excellent lab in which to look forward since sports is an important part in nearly every consumer’s life.  How are you preparing for it to hit your business?

US Overview

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